A summary of key insights from BIP Wealth Chief Investment Officer Eric Cramer’s recent webinar on the state of private credit and what it means for investors.
If you’ve been reading the financial news lately, you’ve probably seen some alarming headlines about private credit. Words like “crisis,” “redemptions,” and “growing concern” seem to be everywhere. However, the gap between what the financial media is reporting and what we’re actually seeing in the space has rarely been wider.
Here’s what you need to know.
What Is Private Credit, Anyway?
At its core, private credit is simply lending that doesn’t happen on a public exchange. It’s the original business of banking—you deposit money, and the bank makes loans with it. Any debt that isn’t publicly tradable qualifies as private credit, whether it’s a single loan or a bundle of them.
Think of it this way: if you’ve ever had a mortgage, a car loan, or a business line of credit, you’ve been on the borrowing side of private credit. The investment side just means you’re the one providing that capital and earning interest in return.
I like to tell people that one of the best ways to learn about private credit is to watch Mary Poppins. I’m serious. The film is set in 1910 England and the family’s last name Banks, which is no coincidence. There’s even a musical number about how the bank takes young Michael’s two pence and puts it to work making loans. That’s essentially a musical number about private credit.
And here’s the part I love: in the sequel, set decades later during the Great Depression, Michael’s money has stayed in the bank all that time. It’s grown enough to pay off his mortgage and rescue his family financially. It’s a memorable illustration of the potential value of a long-term investment horizon.
Why Today’s Headlines on Private Credit Are Misleading
Several recent news stories have painted a troubling picture of private credit, but a closer look suggests a more nuanced reality.
When Blackstone’s private credit fund saw increased redemption requests, management and ownership responded by putting their own money into the fund—a classic vote of confidence. The media, however, framed it as a crisis. When Cliffwater’s interval fund experienced higher-than-usual redemption requests, it wasn’t because the loans were in trouble, it was simply because Cliffwater is the easiest place for investors to access cash quickly. And when Blue Owl sold a $1.27 billion package of loans, they sold at exactly the price they were carrying those loans on their books—99.7 cents on the dollar—which actually validated the strength of their portfolio.
In each case, the underlying investments were performing well. The stories were about investor behavior, not investment quality.
It’s worth noting that on the institutional side, capital continues to flow into private credit. The headline-driven anxiety has been largely concentrated among retail investors.
Where the Real Pressure Is Coming From
So why are some retail investors looking for cash in the first place? The answer lies mostly outside of the private credit space.
Tech stocks experienced significant sell-offs in early 2025 and again in Q1 2026. The S&P 500 IT sector was down over 9% in the first quarter of 2026 alone. Meanwhile, crypto has been hit even harder, falling roughly 50% from its highs. Many of those investors were highly leveraged, meaning they had borrowed money to invest. When their bets went south, they needed to find cash somewhere, and private credit was one of the safest, most stable places they had money sitting.
In other words, the redemption activity in private credit isn’t a sign that private credit is broken. It’s a sign that other parts of the market are under stress, and investors are tapping their most reliable accounts to cover losses elsewhere.
Not All BDCs Are Created Equal
Part of what may be fueling confusion is a misunderstanding about a term you may have seen: BDC, or Business Development Corporation. There are publicly traded BDCs, the kind you can buy and sell every minute in a brokerage account, just like a stock, and then there are privately traded BDCs, which is the type BIP Wealth utilizes in some client portfolios.
The publicly traded versions tend to be more speculative in nature, often carry higher fees (in many cases 5–6% per year), and a number of them trade at significant discounts to their net asset value. In the first quarter of 2026 alone, some of these publicly traded BDCs experienced losses of 25–30%. It’s possible that many of the journalists writing alarming private credit headlines are looking at these publicly traded BDC vehicles—which are not part of BIP Wealth’s current private credit strategy—and conflating them with the broader private credit market.
The “SaaSpocalypse:” Real Threat or SaaSquatch?
One of the buzzwords making the rounds is “SaaSpocalypse”—the idea that artificial intelligence will wipe out the Software-as-a-Service industry. Since many private credit loans are made to software companies, this has raised some eyebrows.
The reality is more complex. Yes, AI will change the software landscape over time. Some SaaS companies may lose customers who can replicate certain functions using AI tools. But many SaaS companies are themselves becoming AI-enabled, and any major disruption will take years, not months, to play out.
More importantly, if you’re worried about SaaS companies struggling, the equity investors (the people who own stock in those companies) stand to lose far more than the lenders. Private credit investors sit higher in what’s known as the “capital stack,” meaning they get paid before equity holders. If a company’s value declines, the stockholders absorb the losses first.
Understanding Your Position: The Capital Stack
Knowing your position in the capital stack is perhaps the most important concept for private credit investors to understand. When you invest in private credit through BIP Wealth, you’re primarily in “senior secured” loans. That means your claim on a company’s assets is near the top of the priority list, ahead of subordinated debt, convertible notes, preferred equity, and common stock.
When I reference a stock like Microsoft dropping a certain percentage, I’m showing you what happened to the common equity, which is at the bottom of the capital stack, where the greatest risk of loss typically resides. Senior secured lenders sit near the top. If a company runs into trouble, senior secured debt holders are generally among the first to be repaid. The equity investors—the ones whose stock prices you see on CNBC—bear the greatest risk. And in many cases, those private equity investors will actually inject more capital into a struggling company to keep it healthy, which makes the senior secured loans even safer.
What Are Evergreen Funds, and Why Do They Matter?
BIP Wealth primarily uses “evergreen” private credit strategies. Unlike older models that required periodic capital calls and had unpredictable timelines, evergreen funds work on a “fund and done” basis. You invest when you’re ready, you earn income along the way, and there are regular opportunities to withdraw.
This structure is becoming the new standard across the industry. In 2025 alone, nearly 80 new evergreen funds launched. Institutions like university endowments and insurance companies are adopting them too, not just individual investors. It’s a more accessible, more transparent, and often lower-fee way to participate in private credit.
The strategies many of you are familiar with, including those managed by firms like LAGO, Monroe, KKR, Barings, and Cliffwater, are the types we’ve evaluated through our due diligence process and offer to clients. Each may serve a slightly different role in a diversified private credit allocation, depending on an investor’s individual circumstances.
Redemption “Gates” Are a Feature, Not a Flaw
You may hear that certain funds are “gating” redemptions, meaning they’re limiting how much investors can withdraw in a given quarter. This sounds alarming, but it’s actually a protective feature, similar to an early withdrawal penalty on a bank CD.
These funds are designed to honor a set percentage of redemption requests each quarter (typically 5–7.5%). If requests exceed that threshold, everyone receives a proportional share. The reason is simple: managers don’t want to sell loans at a discount just because some investors are in a rush. That would hurt the long-term investors who are staying put.
Most of the underlying loans in these portfolios mature in three to four years. If a fund simply stopped making new investments and let everything run its course, it would all convert to cash naturally. There’s no fundamental liquidity problem, just a temporary mismatch between redemption requests and the pace at which loans mature.
What Should You Expect Going Forward?
Continued communication from BIP Wealth. The BIP investment team monitors these markets daily, reads hundreds of articles, and is in constant contact with fund managers. As long as private credit remains in the news, clients can expect regular updates.
More headlines about redemptions, non-accruals, and PIK rates. Non-accruals (borrowers temporarily not making interest payments) and PIK rates (pay-in-kind, where you receive additional principal instead of cash interest) are normal features of lending. For the strategies BIP Wealth recommends, these metrics remain stable and healthy.
Some minor pricing adjustments. As credit spreads widen—meaning new loans are being made at slightly higher rates—existing loans may be marked down slightly to reflect the new market rate. This doesn’t mean the loan is in trouble; it’s simply a bookkeeping adjustment. And the good news is that new investments going into these funds will earn those higher rates, which benefits long-term investors.
Higher yields ahead. The same market dynamics causing short-term noise are actually creating better opportunities. Funds that were projected to yield 9% may now deliver 10% or more, as lenders can command better terms from borrowers.
Possible gating of redemptions. As I explained above, this is a structural feature designed to protect shareholders from forced selling at unfavorable prices. We view it as a prudent risk management tool, not a warning sign.
The Bottom Line
Private credit, particularly the senior secured, diversified, evergreen strategies that BIP Wealth recommends, remains one of the most stable and attractive corners of the investment landscape. The headlines are driven by a combination of media sensationalism, stress in unrelated markets like tech stocks and crypto, and a fundamental misunderstanding of how private lending works.
I’ll leave you with this: Michael Banks left his two pence in the bank, and in the story, it made all the difference. By the time the sequel rolled around decades later, that small investment had grown enough to pay off his mortgage. While fiction isn’t a substitute for financial analysis, the principle of maintaining a long-term perspective, particularly during periods of short-term volatility, has historically served investors well. The investors who stay the course tend to come out ahead.
If you have questions about your own private credit holdings or want to discuss your portfolio, reach out to us to connect with a BIP Personal Wealth Advisor. They’re engaged in this analysis on a regular basis and are ready to discuss the choices that may be right for your individual circumstances and risk tolerance.
Want to Explore Private Credit Yourself? Start Here Using AI.
One of the best ways to build confidence in any investment is to understand it on your own terms. For those who want to dig further into private credit, here are a few prompts you can use with AI tools like ChatGPT or Claude to explore the data behind the strategies we use at BIP Wealth:
“Within private credit, which strategies have demonstrated the lowest default and loss rates over time?”
“What structural protections exist in senior secured loans that are not present in other forms of private credit?”
“How does private equity sponsorship affect recovery rates in direct lending?”
“What have been the historical loss rates for senior secured direct lending funds through economic cycles?”
“What are typical covenant packages in sponsor-backed senior secured private credit deals?”
“How do loan-to-value ratios in private credit investments compare to broadly syndicated loans?”
“How does covenant enforcement impact loss severity in direct lending?”
And here’s a bonus tip: Once you get an answer, ask, “What would be some other good questions for me to ask about private credit?” It will generate a whole new set of prompts to keep learning from. Just be mindful—it’s easy to spend an afternoon going down that rabbit hole.
This blog post is a summary of a recent BIP Wealth client webinar and is intended for informational purposes only. This post should not be construed as investment advice, nor a recommendation or solicitation to buy or sell any security. Ideas contained within this post regarding the market or market conditions represent the views of the author or the sources cited and are subject to change without notice.
All investing involves risk, including the possible loss of principal. Private credit investments involve additional risks, including illiquidity, limited transparency, credit risk, interest rate risk, and the potential for restrictions on withdrawals. Past performance is not indicative of future results. There can be no assurance that actual outcomes will match any expectations described in this post.
Investors cannot invest directly in an index. Index performance does not reflect fees, expenses, or transaction costs associated with the management of an actual portfolio. Data from third-party sources (Morningstar, PitchBook, Standard and Poor’s, MSCI) is believed to be reliable but BIP Wealth cannot guarantee accuracy. Forward-looking statements, estimates, and forecasts are based on assumptions and are not guarantees of future performance.
Investors should consult with their Personal Wealth Advisor to determine what is appropriate for their individual circumstances and risk tolerance. BIP Wealth, LLC (“BIP Wealth”) is registered with the U.S. Securities and Exchange Commission (“SEC”). Registration with the SEC and other state securities authorities as a registered investment adviser does not imply a certain level of skill or training.
Copyright 2026 BIP Wealth. All rights reserved.
As we shared during our 2026 Annual Market Report presentations, we expected the Federal Reserve to hold steady on interest rates for the foreseeable future. That view was firmly reinforced following the Fed’s meeting on Wednesday, March 18th, where futures market pricing left little doubt: the current overnight rate is likely here to stay.
The futures market—where investors express their convictions with dollars rather than words—currently points to the Fed maintaining the existing Federal Funds Rate all the way through the April 28th, 2027 meeting. This rate directly influences money market yields and margin borrowing costs, making it a meaningful benchmark for investors across the board.
That said, the picture isn’t entirely static. While a prolonged pause appears most likely, there remains a meaningful and asymmetrical probability that rates could move lower before the end of 2026. Specifically, futures pricing reflects a measurable chance of cuts of 25 or even 50 basis points by year end, while the probability of a rate increase is, by contrast, nearly zero. The Fed’s “dot plot,” which captures where individual members see rates heading, doesn’t yet reflect a clear consensus, but it does leave the door open to a cut later this year.
One of the key variables to watch will be energy prices. History shows a strong correlation between oil price movements and future inflation, and with ongoing volatility in the region as the situation in Iran continues to develop, energy markets will remain an important signal. We believe futures pricing is among the best real-time tools available for tracking how these dynamics are evolving and we will continue monitoring them closely on your behalf.
As always, we’ll keep you informed as the landscape shifts. For those who want to explore the data directly, the CME FedWatch Tool offers an up-to-date view of rate expectations as priced by the market.
This post is provided for informational purposes only. Specific investments may not be suitable for all investors and no offer or recommendation of any investment or investing strategy is intended or implied by your choosing to read this post. This material is not intended to be relied upon as a forecast or investment advice regarding a particular investment or the markets in general, nor is it intended to predict or depict the performance of any investment. The third-party information in this post is from sources we believe to be reliable, but BIP Wealth cannot guarantee its accuracy.
Welcome to our 2026 Annual Market Report with Eric Cramer, CFP®, CFA®, BIP Wealth’s Chief Investment Officer. For this year’s presentation, Eric starts with an honest scorecard of how BIP’s 2025 investment themes played out, recaps what happened in markets around the globe, and makes the case for why the economic landscape is shifting in ways that matter for your portfolio.
In case you missed the live presentation, we’ve summarized Eric’s main talking points below. You can also watch the recording of the presentation below.
Grading Our 2025 Investment Themes
Eric opened by going back to the four key investment themes BIP Wealth identified for 2025 and gave an honest accounting of how each played out.
Theme 1: Brace for a Tech/Crypto Crash
Eric acknowledged this one made BIP Wealth CEO Bill Harris a little bit nervous when he used the word crash—but Eric’s reasoning was sound. A lot of tech and crypto exposure was leveraged, and as we saw during the housing crisis, leverage in any direction can be a real problem.
By the end of Q1, it looked like Eric was going to be right—and he admitted he honestly was not excited about that. Tech stocks got hit hard in the first quarter. Tesla fell 35.83%. NVIDIA fell 19.29%. But then something remarkable happened: markets turned the corner and several of those same stocks came roaring back. Alphabet, for example, went from down 18% in Q1 to up more than 65% for the full year. Berkshire Hathaway flipped the other direction, shining in Q1 when tech was falling, then giving some of that back over the remaining three quarters.
The ultimate verdict? “We kinda got close to a crash,” Eric said, “but crash is probably too strong a word.” It was a significant downturn followed by a remarkable recovery.
Source: Source: Morningstar, Worldperatio.com, PE Data as of 12/31/2024, Returns Data as of 3/31/2025, 12/31/2025
Theme 2: It’s Time to Diversify
The public stock market’s top 10 stocks represented about a third of the entire market’s value at the start of 2025—and even a little more by the end. While most investment managers typically think of diversification in terms of the public markets, Eric made the case for private markets as the most meaningful diversification tool available.
On the private equity side, Eric shared compelling data: over longer periods, private equity has delivered returns roughly four percent higher per year than public equity. And crucially, the two asset classes don’t move in lockstep—which means holding both yields lowers volatility than holding either one alone, as the markets are not directly correlated.
He also highlighted a significant change in how investors can access private markets. The traditional model—committing to a fund, experiencing years of capital calls, then waiting another decade for your money back—is giving way to a new breed of vehicles called Evergreen Funds, including BDCs and interval funds. These allow you to put money in when you want and request liquidity in advance of when you need it. Eric called this a game changer for us and for you and noted that the newest versions have little to no paperwork.
Source: Source: Preqin, Wilshire. Risk and return data is based on quarterly time-weighted returns beginning December 31, 2008 and ending December 31, 2024. The “Traditional 60/40 portfolio” frontier represents an allocation to global equity (MSCI ACWI) and an allocation to core fixed income (Bloomberg US Aggregate Index). Node F represents a portfolio comprised of 45% global equities (GE) and 55% core fixed income (CFI); Node G: 50% GE and 50% CFI; Node H: 55% GE and 45% CFI: Node I: 60% GE and 40% CFI; Node J: 65% GE and 35% CFI.
The “Enhanced portfolio with 20% diversified private markets exposure” frontier represents allocations to global equity (MSCI ACWI), core fixed income (Bloomberg US Aggregate Index ), and 20% to private markets (consisting of median risk and returns from Preqin’s Quarterly Index – 10% private equity, 5% private credit, and 5% private real assets). Node A represents a portfolio of 40% global equities (GE), 40% core fixed income (CFI), and 20% diversified private markets (DPM); Node B: 45% GE, 35% CFI, and 20% DPM; Node C: 50% GE, 30% CFI, and 20% DPM; Node D: 55% GE, 25% CFI, and 20% DPM; Node E: 55% GE, 25% CFI, and 20% DPM. For illustrative and discussion purposes only.
Theme 3: Financial Planning is Critical
Eric noted he was pleased to see that many BIP Wealth clients got their financial plans updated in 2025. This remains a core part of the BIP approach: there are often risks that can be identified and mitigated with the right plan in place. No further commentary needed — just a strong endorsement to keep your plan current.
Theme 4: Safer Assets Can Be Productive
The era of earning inflation-beating returns on the safest possible assets has narrowed significantly. Short-term treasuries are currently yielding around 3.6%, and Eric doesn’t expect the Federal Reserve to lower rates for much of, or possibly all of 2026. They held at the last meeting, and the futures market puts any cut likely at mid-year at the earliest. He noted there’s even a scenario where rates could move higher.
For clients in high tax brackets holding treasuries in taxable accounts, the margin over inflation has become thin. That’s led BIP to look more closely at municipal bond strategies, which Eric described as increasingly attractive. Because so many states have balanced budget requirements, he went as far as suggesting that munis may be the new treasuries in terms of safety.
The Market Recap: Let’s Get Out the Globe
The Year That Felt Like Surgery Without Anesthesia
Someone told Eric that 2025 felt “a bit like surgery without anesthesia.” The year was packed with headlines: tariff announcements, geopolitical moves, government shutdowns, market swings. But if you missed the news and just looked at the value of your investment accounts, you might have blinked and missed the fact that there was even a downturn. Markets dipped on tariff news early in the year and came right back. This is the third consecutive year of a strong global stock market, and Eric noted that for many clients, their own balance sheets are about as big as they’ve ever been.
Even though the U.S. stock market had a terrific year—returning 17.15%—the best returns in 2025 came from outside the country. International developed market stocks returned 31.85% for the year. Emerging market stocks returned 33.57%, nearly double what the U.S. produced.
A big part of the story is the weakening U.S. dollar. When the dollar weakens, foreign currencies strengthen. And when you invest in overseas equity markets, you’re really investing in both a foreign stock market and a foreign currency. When both go up together, you get the compounded effect of those two phenomena. That’s how you get these impressive international numbers.
It’s worth noting, however, that a weaker dollar cuts both ways. It can help U.S. manufacturers whose goods become cheaper overseas, but it makes imported goods more expensive for the rest of us. More dollars to buy the same goods: that’s the definition of inflation.
The Market Outlook: Revaluing Debt and Currencies
Eric warned this section would feel a little bit like an econ class, but the material is important, and he walked through it in a way that’s worth unpacking.
Japan and the Carry Trade: A Crisis in the Making?
One of the more fascinating and underappreciated dynamics affecting global markets right now is what’s happening in Japan. For decades, Japan had ultra-low or even negative interest rates. Home safes became popular in Japan because at least your money didn’t shrink sitting in a safe. But in a negative rate environment, sophisticated financial players could borrow in Japanese yen for next to nothing, invest in U.S. Treasuries at 4%, and pocket a comfortable margin. This was the Japanese carry trade, and it reached into the trillions of dollars across decades.
That trade has more or less evaporated. Japan’s interest rates have skyrocketed, borrowing costs are far higher, and the margin that made the trade profitable is gone. This is a real problem and it’s one reason why the U.S. could see pressure to intervene in currency markets, which would further weaken an already weakened dollar.
Consumer Confidence: A Tale of Two Americas
The consumer confidence data tells a nuanced story. The “present situation” index is holding up better than the “expectations” index—both trending downward, but the present looks better than the future. Eric noted he often encounters this disconnect in conversations with clients: “I’ll ask them how they’re doing, and they may talk about pessimism about the economy. But when we get down to how they’re doing personally, they’re often doing great.”
Part of what explains that gap is who drives consumer spending. The top 20% of earners are responsible for about half of all consumer spending in the U.S.
Here’s a concept worth sitting with: Eric learned in business school that the stock market reflects the state of the economy. But he thinks that may have flipped. Today, if the stock market is doing well and your balance sheet is at record highs, you feel good about spending—and the economy follows. The tail is wagging the dog.
For those in the top tier of earners and asset holders, this dynamic is likely to persist. If there’s a problem with interest rates and the Fed has to come to the rescue printing money, if you’ve got an investment portfolio, you’re probably going to be fine.
Our 2026 Key Investment Themes
Looking ahead, BIP Wealth has identified four themes that will shape our investment approach this year:
Revaluing of Debt & Currencies: Credit spreads and interest rates are vulnerable.
Shifting Global Trade Power: New trade agreements are being written around the globe that may increasingly leave out the United States. This has real implications for the dollar’s global dominance, and it’s something Eric intends to watch closely and update clients on throughout the year.
Using Math to Your Advantage: Throughout 2026, BIP will share specific “nuggets of math” that could improve your return, lower your risk, or improve your overall financial situation.
Maneuvering for the Post-Trump Era: The countdown clock is already ticking, and both political parties are maneuvering now. The 2026 midterm elections are going to be a very big deal, with potentially significant effects on tax rates, monetary policy, and fiscal policy.
Final Thoughts from Eric Cramer, CFP®, CFA®
Eric closed with a broader perspective on the moment we’re in. The world is changing fast—AI, global trade, geopolitics—and that’s changing the landscape for investing in ways that require expertise and attention to evidence rather than headlines.
America is divided, economically as much as politically. The bottom half of Americans don’t own a share of stock. The top earners hold most of the assets and drive most of the spending. For BIP Wealth clients, that divide is actually somewhat protective, but it also creates instability that we need to plan around.
“BIP Wealth is dedicated to using the best evidence available to help you meet your financial goals in a future that doesn’t look like the past,” Eric said. “This is when expertise and insight matter most.”
Don’t be surprised if your Personal Wealth Advisor brings new ideas to your next conversation. BIP Wealth is actively building and deploying new tools to help clients navigate everything this year may bring. If you’d like to speak with an advisor about your portfolio or learn more about how our 2026 themes might affect your financial plan, we’d love to hear from you.
This communication contains general investing information that is not suitable for everyone and is subject to change without notice. Past performance is no guarantee of future results and there is no guarantee that any views and opinions expressed will come to pass. The information contained herein should not be construed as personalized investment advice, tax advice, or financial planning advice, and should not be considered a solicitation to buy or sell any security. Investing in the stock market and the bond market involves gains and losses and may not be suitable for all investors. Indices are not available for direct investment. Certain private market investments are subject to qualification thresholds and are subject to significant risks, including liquidity risk.
Private Credit is a large and growing category in the private market investing landscape. With exits harder to come by lately, more companies are adding debt to their capital structure (for several reasons that include avoiding direct dilution of equity). The dramatic increase in importance of private credit to the funding of companies has also led to a proliferation of funding vehicles that investors might participate in. New managers are popping up almost daily, and new vehicle types are emerging too. Co-investments, drawdown funds, public BDCs, private BDCs, and now Interval Funds are all seeing growth. These vehicles are making it easier for retail investors to include private credit in their portfolios.
In the broader credit markets, several trends are unfolding that could have a negative impact on some parts of Private Credit.
First, base rates are falling. The Fed has now lowered the overnight rate, as it should, to remove us from a restrictive stance. Many private credit strategies use floating rate loans, so falling rates will naturally lower yields. Investors should keep in mind that their return is a combination of the yield and the always changing price. Minor fluctuations in price are normal, and investors can expect yields to be lower in 2026 than they were in 2025. The long end of the yield curve is falling too, as the Fed ends quantitative tightening (no longer dumping bonds on the market to decrease its balance sheet, which was draining liquidity out of the system). We are also near a multi-year low point for credit spreads, reflecting that investors are getting paid less to take credit risk.
The combination of new money coming into Private Credit, along with a changing rate structure and price for credit risk, will certainly influence Private Credit in the larger sense. But the devil is in the details, and broad pronouncements that read something like “private credit is in trouble” are not accurate, not helpful, and outright confusing to our clients.
At BIP, we believed this would eventually happen, and we welcome the market pressure. It’s our chance to prove we know what we’re doing. This is the perfect time to show how real knowledge is so much more valuable than just knowing the headlines. Our clients are counting on us at BIP Wealth to get this right. And we have already done our homework to make sure we have a variety of evergreen strategies that we expect to do well in a variety of economic conditions.
Here are several important ideas you should know:
1. Recent headlines about private credit BDCs getting into trouble are referring to publicly traded BDCs and not the privately traded BDCs that BIP Wealth presents to our clients.
Business Development Companies are entities that meet certain regulatory requirements created in 1980 and are close-end funds that distribute 90% of income. We track about 3 dozen publicly traded BDCs, and 2025 returns through 12/31/25 range from +16.75% to -27.38%, with more in negative territory than positive. This is markedly different from the returns we are seeing in the vehicles we’re using, and you may notice that few survived the pullback in credit markets during 2022 unscathed.
Original data from Morningstar as of 12/31/2025
2. These publicly traded BDCs that we don’t own often trade in BSLs (Broadly Syndicated Loans), which BIP’s strategies almost completely avoid.
BSLs tend to be of lower quality and lack the covenants and remedies that are the hallmark of our strategies. BSLs are originated by banks, securitized, and then traded daily. Some might equate this to juggling chainsaws when credit markets turn sour—you want to drop them as quickly as you can to avoid getting your hand cut off.
3. The privately traded BDCs that BIP uses have several commonalities:
Our strategies invest almost entirely in Senior Secured Loans. Not subordinated debt, not mezzanine debt, not BSLs. Instead, their lending is usually at the top of the capital stack on the balance sheet of the borrowers. In other words, the borrowers must pay our loans first, above almost all other obligations.
Our strategies are lending a large proportion of their funds to borrowers who are also supported by private equity funds. These private equity managers give an equity cushion that can often be expanded during times of financial stress (through loan covenants) to increase the safety of the loans when needed. Covenants may compel the PE sponsors to add more cash to the balance sheet or take other measures to protect the security of the loans.
Our strategies are mostly floating rate loans. This provides a consistent cushion of 500-600 bps above the returns of low-risk public market fixed income alternatives. In the current environment, rates are falling, which lowers lending returns but also lowers the cost of leverage experienced by these strategies, avoiding a rate mis-match problem that banks have been dealing with forever (and not very successfully in 2022 when banks invested in long-term low rate Treasurys while having to pay out high rates to their depositors)!
Our strategies were selected for their market discipline and are not chasing returns by deviating from their target market. Some target smaller companies and some target larger companies, but there is no evidence of our strategies having to corrupt their mandates to invest money, or of them accepting inadequate terms from borrowers.
The manufacturers we have chosen usually originate the deals they invest in, or are a part of a small group that originates the deals. This is very different from the BSL market. This allows them to have a deep understanding of each borrower’s risk profile and business strategy.
Leverage is limited. BDCs can borrow money to amplify returns, which is generally good for investors. But in the range of what is allowed (borrowing $2 for every $1 of investor equity), ours are pretty tame. This allowable amount of leverage is double what was allowed until 2018, but only the riskier strategies that we have not chosen are that leveraged. Interval funds are only allowed $.5 of leverage, so the new interval fund choices are even less exposed to the math of leverage if prices were to fall.
Most of our BDCs are highly diversified, owning hundreds of loans with very small exposure to even their largest positions. This diversification is often a key way to control risk to the investor.
4. We also invest in individual deals, or “co-investments.”
These are, by nature, not diversified. But here again, the details are important. Many are convertible notes, which in reality are equity deals that pay a yield to the investor and sit above other equity investments in terms of their priority. We have a long history of enjoying some of our best equity returns from these investments.
5. By offering several carefully selected managers that are working at what we believe is the safer end of the private credit markets, we are in the enviable position of being able to stand back and watch what happens to the rest of the market if things turn sour.
We expect to be able to prove to our clients that your trust in us is warranted. But this comes with the obligation to explain our prudent process in a world of scary headlines. If the risky end of the private credit market does start to experience significant stress, some of our clients may become concerned.
If you would like to learn more about our Private Credit strategies and if they might be a fit for you, the BIP Wealth team is here to help. Contact us today to be connected with a trusted advisor.
This post is provided for informational purposes only. Specific investments may not be suitable for all investors and no offer or recommendation of any investment or investing strategy is intended or implied by your choosing to read this post. Privately traded offerings may only be available to investors who meet certain qualification statuses.
This material is not intended to be relied upon as a forecast or investment advice regarding a particular investment or the markets in general, nor is it intended to predict or depict the performance of any investment. Past performance is no guarantee of future results. All investments involve risks including loss of principal.
During BIP Wealth’s recent Quarterly Market Webinar, Eric Cramer, CFP®, CFA®, BIP Wealth’s Chief Investment Officer shared a timely and insightful update that focused less on artificial intelligence this time—and more on what’s truly shaping today’s economic environment. The session was divided into three parts: a strategic review of BIP Wealth’s 2025 market themes, a recap of Q1’s market behavior, and a look forward at the implications of reemerging global tariffs.
In case you missed the presentation, we’ll go over Eric’s main talking points. You can also watch the recording of the presentation..
Below is a breakdown of the key themes covered and how they apply to investors.
1. Strategy Review: Rethinking Risk and Embracing Diversification
Eric shared that investors must reconsider their approach to risk in 2025. The first quarter highlighted vulnerabilities in public markets, especially within tech-heavy portfolios. While some investors remain heavily tilted toward growth stocks, Eric emphasized the importance of rebalancing portfolios to include more resilient, diversified holdings.
Private markets—especially private credit—are a critical part of this evolution. Many investors still have limited exposure to private credit, even though it can offer income stability and reduced correlation to stock market swings.
BIP Wealth has the tools in place to help clients diversify effectively. Beyond asset classes, our message is also about planning discipline: investors should align their portfolios with long-term goals, not short-term trends. Eric cautioned against assuming that more risk automatically means more return, especially when individual plans might already be on track with more moderate exposure.
“Financial plans should guide risk, not the headlines.”
2. Q1 Market Recap: “Tech Tanked, the Dollar Dropped”
In the next section, Eric covered the notable movements from Q1 2025. The standout theme? Technology stocks saw significant declines, disrupting the market’s previous growth-led narrative. Simultaneously, the U.S. dollar experienced a noticeable drop, adding complexity to global investments.
The volatility seen in early April raised concerns, but a rebound later in the month provided perspective. Despite dramatic swings, the market returned to roughly where it started by the end of April. This whipsaw behavior reinforced why tactical shifts alone aren’t sufficient: portfolios need long-term resilience, not just short-term reaction.
For active observers, this served as a reminder that recovery often follows volatility—but only disciplined, diversified portfolios benefit consistently over time.
3. Looking Ahead: Trade Policy and the Return of Tariffs
Finally, Eric wrapped up this quarter’s report with a segment dedicated to tariffs. While trade policy developments are complex and far-reaching, here’s an overview of what matters now:
Fluctuating tariff policy continues to dominate the conversation amongst major global economies.
These shifts may impact supply chains, cost structures, and corporate earnings, particularly in industrial and manufacturing sectors.
Investors with concentrated international exposure may face higher volatility or sector-specific drag.
Global economic friction is back, and it needs to be factored into asset allocation decisions. It’s not just about what’s growing—but what’s being taxed, restricted, or redirected.
A Call to Revisit Financial Plans
Eric closed by encouraging every client to revisit their financial plan. Too many investors are still positioned based on outdated assumptions—chasing growth or risk without considering whether it’s necessary for their goals.
Drawing comparisons to pre-2008 planning errors, the team warned against overreaching. Many clients could meet their objectives with lower risk—provided they embrace more balanced, well-structured portfolios that incorporate alternatives and downside protection.
“You don’t need to ride the roller coaster if your goals don’t require it.”
Final Thoughts
This quarter’s report made one thing clear: in a year of shifting risks—tech pullbacks, currency changes, and geopolitical trade pressures—flexibility and discipline matter more than ever. BIP Wealth continues to evolve its strategies to help clients thrive through the uncertainty.
If you’d like to speak to a Personal Wealth Advisor about your portfolio or want to learn more about how we’re engineered to perform for our clients, be sure to contact us. You can also check out the rest of our resources hub to learn more.
This communication contains general investing information that is not suitable for everyone and is subject to change without notice. Past performance is no guarantee of future results and there is no guarantee that any views and opinions expressed will come to pass. The information contained herein should not be construed as personalized investment advice, tax advice, or financial planning advice, and should not be considered a solicitation to buy or sell any security. Investing in the stock market and the bond market involves gains and losses and may not be suitable for all investors. Indices are not available for direct investment.
If you have been consuming financial news this week, you will know the stock market has taken a bit of a plunge due to the tariffs announced on Wednesday afternoon. This comes on the heels of a volatile stock market in the first quarter. We wanted to give you BIP Wealth’s perspective on these recent events, although we are not ready to predict the final outcome.
What’s Driving Market Volatility Right Now?
We think the best way to understand what’s happening is to consider the actions of the four forces at play:
Force #1) Tariff Policy.
The current administration is using tariffs to re-write the economic relationship between the United States and other economies. For many years, other countries have imposed tariffs on U.S. goods and services that have been a bit lopsided against us. The U.S. has imposed its own tariffs on some imported goods in an effort to protect workers, while at the same time there have been numerous “free trade” agreements with favored nations. The history of tariffs goes back hundreds of years, but in more recent times the U.S. has emerged through it all as the world’s leading consumer economy of imported goods, while oftentimes struggling to export its own products while struggling with downward wage pressure at home. These newly announced tariffs are a powerful negotiating tool designed to leverage our consumer appetite and economic strength, but it is impossible to know where this will all settle out and when.
Force #2) Retaliation by other economies.
China has already announced retaliatory tariffs, although one could argue that the new U.S. tariffs were in retaliation for a massive trade imbalance that China protected. Over the next week we can expect to hear similar announcements from dozens of countries. This progression into a “trade war” could have a significant negative impact on the global economy, however many countries are expected to reach out to the Trump administration to negotiate. Some of these responses will likely be an effort to make the kind of “phenomenal offer” that President Trump has hinted he would be looking for. It is impossible to predict how this will end, but we will be watching to see the terms of the first few deals to see what it takes to settle these issues.
Force #3) The Federal Reserve.
For the past year, the Fed has enjoyed owning what is often called the “Fed Put.” This is borrowing terminology from the options markets, and refers to the idea that if the economy gets in trouble then the Fed can respond by lowering interest rates to prevent a recession. However, this only works when inflation is contained. Generally speaking, when interest rates are lowered it can cause inflation to rise; and with the Fed having bungled this quite a bit in the post-pandemic era they will likely be slow to move. Today President Donald Trump called on the Fed to lower overnight rates immediately. But tariffs on imported goods are expected to double the rate of inflation in 2025 to perhaps a rate of 5%, so any move by the Fed that could make that worse is quite the gamble. The Fed has a mandate to foster full employment, stable long term interest rates, and low inflation; but it does not have a mandate to do exactly what is being asked of it now. It is impossible to know how the Fed will respond at this point, although we will be listening intently to find out.
Force #4) The American electorate.
For the moment, the idea of tariffs seems to enjoy broad support among working Americans. Many families have watched in frustration for decades as furniture, textile, and manufacturing jobs have been offshored. Real wage growth in non-technical jobs has been slow, and it is correct to think that globalization has worsened the economic fortunes for many Americans. At the same time, we have enjoyed the benefits of lower prices on goods manufactured in low labor cost countries in Asia and elsewhere. Wall Street voices have been highly critical of the scope and pace of the new tariff policies this week, but that group is simply not the President’s constituency. If we fall into a recession, and American unemployment spikes, it will likely be happening around the globe even worse.
Understanding the situation through these four forces may not give you any comfort right now. But this is how we see it, and we’re watching events unfold just like you. Let’s keep in mind that a relief rally could be upon us at any time, and it could be a big mistake to assume that the pace of the sell-off will simply continue.
In our Annual Market Report earlier this year we suggested some steps you could take to prepare for this kind of uncertainty. Click the link below to check out Eric Cramer’s Webinar from Q1…
Our 4 Key Investment Themes for 2025
As a reminder, here are our 4 Key Themes for 2025 and what we’ve seen so far:
Brace for a Tech/Crypto Crash (Leverage has Created Systematic Risk for Most Assets)
Well, tech stocks did crash. We have strategies in place to help clients with large concentrations to mitigate risk.
It’s Time to Diversify (The Public Stock Market is Over-Concentrated)
We suggested that indexing would not be sufficient due to the concentration in public equities, and that using private credit in particular could be an effective way for many clients to possibly increase their expected return while lowering their expected risk.
Financial Planning is Critical (Look for Hidden and Unnecessary Risk)
We did our best to suggest that some clients may have more exposure to public equities than they “needed” to have. This was in addition to the other benefits of financial planning, such as risk mitigation through an insurance review.
Safer Assets Can be Productive (Treasurys Still Offer Inflation-Beating Yields)
We offer clients BIP Short-Term Tactical, which is our proprietary trading strategy providing an alternative to holding cash in banks. The primary goals of the strategy include achieving a rate of return higher than banks commonly offer, capital preservation, and liquidity, while mitigating risk.
While we can’t predict the future, we strongly suggest having a well-rounded financial plan. This is a great time to take a look at your particular situation and work with a BIP Personal Wealth Advisor so you can take advantage of all the tools we have at our disposal.
Thanks for reading, and please know that we will continue to update you as events unfold.
This post is provided for informational purposes only. Specific investments may not be suitable for all investors and no offer or recommendation of any investment or investing strategy is intended. The opinions in this commentary are as of the posting date and are subject to change. Information has been obtained from third-party sources we consider reliable, but we do not guarantee the facts cited are accurate or complete. This material is not intended to be relied upon as a forecast or investment advice regarding a particular investment or the markets in general, nor is it intended to predict or depict the performance of any investment. We may execute transactions in securities that may not be consistent with what is mentioned here. Investors should consult their financial advisor on the strategy best for them. Past performance is no guarantee of future results. All investments involve risks including loss of principal.
Welcome to our final BIP Wealth Quarterly Market Report of 2024 with Eric Cramer, CFP®, CFA®, Chief Investment Officer. In Q4’s report leading up to the 2024 U.S. Presidential Election, Eric starts with a look at historical trends under each presidential administration dating back to 1926 and touches on other key economic data points.
In case you missed the presentation, we’ll go over Eric’s main talking points below. You can also watch the recording of the presentation below.
Historical Trends Are Encouraging
With the upcoming 2024 U.S. Presidential Election, we know that a political crisis may test the market. Eric encouraged everyone to take a moment to put on their investor hat. From that more narrow perspective, Eric reviewed the history of the S&P 500 to see how that’s performed over history in the context of who is in the White House. What we see is that markets have gone up over long periods of time under every administration.The point is to remind people that when you’re investing in the stock market, you’re really investing in a much larger system than who is in office at any particular time. You’re investing in democracy, you’re investing in capitalism, you’re investing in the ingenuity and entrepreneurialism of the U.S. in particular. It’s an investment and trust in a system that’s bigger than any one particular candidate.
Looking back over the last 90 days of Q3, the Global Equity Index ended higher than when it started, which has been the pattern all year. There were some fluctuations here and there from a variety of events. Two major headlines stood out in interest to Eric when analyzing the market’s overall performance. The first was the UK’s Labor Party winning election, with the Conservative Party being thrown out. Like in the U.S. and around the world, there was inflation in the UK, and the party in power took the blame and got tossed out.
The second headline of particular interest to Eric is that the Federal Reserve cut rates by half a percentage point. While Eric had hoped they’d start cutting rates at the beginning of this year, they’re still catching up. Regardless, we are happy to see a 50 basis point rate cut at the end of the quarter. The market liked that and continues to like that.
Looking at the blended benchmark results, things have continued to evolve since the Fed cut rates. We’re seeing an amazing 5.2% return in the Fixed Income Index for the last 3 months in light of the YTD return being 4.45%.
This is interesting because Interest rates fell across the yield curve. The 3-year return for the Fixed Income Index is -1.39% per year. Now because of the Fed getting out of the way, interest rates have started to rise. We see that as a vote of confidence in the economy. The YTD return as we’re reporting today is less than 2%. More than half of what you see in the YTD return has been wiped out.
It’s a good thing that we do not index our exposure to the fixed income market here at BIP Wealth, instead we’ve been fortunate to take advantage of higher short term rates and have a very stable, predictable return for our clients.
The Market Outlook: Expecting the Best, But…
Let’s talk about the future. We’ve been able to be optimistic all year long like we were the year before.
Economic growth has been quite solid. There’s been some interesting updates to prior history that’s come out this quarter. For instance, there was a report that dramatically reduced the number of jobs that have been created in the last 18 months, but just a few days after that, we got an update that revised upwards the 2022 rate of GDP growth and also the 2023 rate of GDP growth.
When we get a GDP number, what we know is that’s not the final number. It will be revised time and time again. Eric’s favorite indicator is the Weekly Economic Index (WEI). It’s a bit more volatile, but over the long run that tends to correlate nicely with the eventual GPD numbers that we’re able to prove valid. What we see with the WEI is that we’re cranking along at about 2% annual real rate of economic growth.
We never saw a reason to predict a recession and we’re not seeing one now. The US economy continues to crank out this nice stable rate of growth.
It’s also interesting to look at inflation in many of the major developed economies around the globe. Eric highlighted the below graphic for the first time showing how inflation in these major global economies was bouncing around a bit until the pandemic, and then tended to correlate. Within a year of the pandemic, we see that a couple of major things happened.
One is that all the major central banks followed the lead of the Federal Reserve. The recession only lasted about 3 months in the US from the pandemic because of all the fiscal and monetary stimulus that the government threw at it. Yet the Federal Reserve continued to keep interest rates at essentially zero and all the other central banks followed suit. This became a problem and we saw a knock-on effect as inflation was ignited all over the globe.
What we see now that all these central banks are catching up to the Fed in lowering rates is that inflation is falling. Eric predicts that we’ll continue to see inflation fall and hopefully won’t join the UK where the rate of inflation is too low because deflation can be a real problem.
In conclusion, Eric left clients with some final thoughts. Unlike past years, this year we’re more worried about politics and global conflict than the economy. We’re optimistic about the stock market, but we’re able to enjoy higher returns on safer investments than has been the case in decades, so you don’t have to take risk you don’t need.
The U.S. Presidential Election Has the World on Edge. American election integrity is critical to our democracy and economic prosperity, and we are all waiting to see if the election results, regardless of the outcome, are accepted by the citizenry as legitimate. Policy choices that include taxation, immigration, and civil rights, continue to divide the country. In other words, there will be a lot of unhappy voters no matter what the result. However, historical data suggests that markets have gone up over long periods of time under every administration, regardless of party. American ingenuity and our capitalist system have combined to drive the economy, and our capital markets, forward under almost all political circumstances.
BIP Wealth Has New Tools in the “Toolbox.” Each investment tool, or strategy, is a potential component of a comprehensive investment plan. Each tool has a distinct role to play in an overall investment strategy, and not every tool is needed by every investor. For instance, the BIP Concentrated Stock Strategy seeks to reduce the volatility of a single large stock holding by half, but many investors don’t hold such positions. The BIP Short-Term Tactical takes advantage of the current yield environment to pursue capital preservation while seeking yields meaningfully higher than what most banks are able to offer.
If you’d like to speak to an advisor about your portfolio or want to learn more about how we’re engineered to perform for our clients, be sure to contact us. You can also check out the rest of our resources hub to learn more about the financial market.
Questions Asked:
Despite the Fed lowering interest rates by 50 basis points, treasury rates specifically those for longer term treasuries have gone up substantially. Is this a concerning trend predicting a near-term recession or issues with our national debt?
Eric has three responses to this:
Investment Style: BIP Wealth’s fixed income investment approach minimizes risk, leading to better portfolio performance compared to past index declines.
Short-Term Interest Rates: Eric likens the Fed’s management of short-term interest rates to balancing a broom, where changes in rates can inversely affect the economy and long-term rates.
National Debt Concerns: While excessive government borrowing could lead to rising long-term interest rates (crowding out theory), Eric believes the current situation is manageable. Lowering short-term rates could stimulate economic growth, leading to a healthier yield curve, which is typically characterized by low short-term rates and higher long-term rates. Overall, this scenario is seen as a positive development for the economy.
On the First Market recap slide there was a reference to Korea and was that in particular just South Korea?
Yes, that is just South Korea and the rules about listing countries follow a hierarchy. We have developed markets like our own and you have to have property rights and regulation and capitalism functioning more or less the way you’d want it to be with mostly free markets. Then you have a second tier that we call Emerging Markets where some of those things don’t work quite as well. South Korea is certainly a developed market, but then you get other economies that are capitalist and their markets you can invest in and and they’re called Emerging Markets. What we’re showing is the top level developed markets but then also the Emerging Markets, not the frontier and then not the uninvestable markets.
What if any changes to our investment philosophy do you foresee if a significant tariff regime is implemented by a new Administration?
Current tariffs, originating from both the Trump and Biden administrations, can stifle economic growth by disrupting free market dynamics. While some manufacturing has shifted to the U.S. to avoid tariffs, other sectors like textiles have lost jobs overseas, leading to potential inflation and slower global growth. Regarding technology, at BIP Wealth, we advocate for a balanced investment strategy that includes both growth and value stocks, noting that many profitable companies aren’t strictly growth-focused. Additionally, technology’s influence permeates various industries, with advancements like AI benefiting even non-tech sectors. Overall, the relationship between tariffs, technology, and investment is complex and multifaceted.
This communication contains general investing information that is not suitable for everyone and is subject to change without notice. Past performance is no guarantee of future results and there is no guarantee that any views and opinions expressed will come to pass. The information contained herein should not be construed as personalized investment advice, tax advice, or financial planning advice, and should not be considered a solicitation to buy or sell any security. Investing in the stock market and the bond market involves gains and losses and may not be suitable for all investors. Indices are not available for direct investment.
September’s strong jobs report surprised some, but we’ve been telling our clients the economy is fundamentally strong all year. The short version of what we learned with the release of the September jobs report is this: We added 254,000 jobs in September, which is much stronger than the 150,000 consensus forecast.
What does this mean for the economy?
It was widely reported in late August that the BLS had a massive revision downwards in job growth from 3/2023 to 3/2024 (they revise every year). They reduced the amount of job growth by 818,000 jobs, which is one of the largest downward revisions ever. This stoked concerns of a “jobs recession” even though employers are struggling to find workers and other data (such as job openings) confirm a generally strong labor market.
It was less widely reported that in September, real GDP through the end of 2023 was revised up by 1.2%, and 2024 Q2 was revised up .1%. This was mostly due to stronger consumer spending, a metric we have consistently tracked (while also debunking the notion that consumers had run out of money).
It looks like the Fed’s slow pace of lowering rates hasn’t pushed us into a recession. And the Weekly Economic Index (WEI predicts GDP) suggests we aren’t headed for a recession anytime soon.
What does this mean for interest rates?
The strong economy may mean the Fed will take its time lowering interest rates. Current futures pricing shows a 25 bps cut on 11/7 and another 25 bps cut 12/18. Inflation is generally under control, but if energy prices spike due to increased tensions in the Middle East this could affect the data. But it’s safe to expect that we can continue to earn a yield on the short end of the Treasury yield curve that is well above the rate of inflation, and that our Short-Term Tactical strategy will have a useful role to play in client portfolios for the foreseeable future.
At the same time, longer term yields are on the move upwards. If this continues, then we will eventually end up with a so-called “normal” yield curve where investors earn more than the rate of inflation across all terms (even though we haven’t seen much of this for decades). This would be great for investors and businesses, and is what we can expect if the Fed eventually gets to a neutral stance and lets markets be free. It wouldn’t be unreasonable to expect that by the end of 2025 we have the short end of the curve at about 3-3.5%, with the long end of the curve at 4-6%. But there is a lot going on in the world right now that could change the picture between now and then.
What does this mean for the stock market?
As we’ve been saying all year, a strong economy that doesn’t go into a recession suggests it’s a good time to be a stock market investor. A Fed that is lowering rates, and promises to lower them as much as needed to protect the economy, is called the “Fed Put.” We’ve got that right now, and that’s about all a stock market investor could hope for.
But that doesn’t mean there won’t be some companies that aren’t big losers. Individual stock volatility is still quite high, and we think that will continue. Macro events, along with changes in technology that include the emergence of AI as an essential business tool, will re-order the competitive landscape. Many billions of dollars are being invested in innovation all over the world, and especially in the U.S. This isn’t happening in a vacuum—it’s happening with the explicit intention of changing which companies win, and which fall by the wayside. That makes it a good time to be diversified, and for many investors a good time to look at investment strategies like our Concentrated Stock strategy to manage risk.
